Chrysler sales rise but problems lurk behind profits
A year after getting billions of dollars in federal help to stay in business, now Chrysler brags monthly sales increase, insisting that it is rolling on the road to recovery.
But beneath the surface of the sales figures are worrying signs for Chrysler. The company has a long way to go before it really is healthy again.
Most Chrysler wins this year came from sales to rental car companies, governments and other businesses, according to confidential data obtained by the Associated Press. Everyday drivers have shunned the date line of cars and trucks.
A successful Chrysler is essential for the government because it is trying to get back $ 15 billion in emergency loans made to the company.
Chrysler lost $ 197,000,000 in the first quarter and it expected to post a net loss when it releases second quarter results on Monday.
Overall, Chrysler U.S. sales rose 12 percent from January to June compared with 2009. But sales to individuals, known as retail, fell 21 percent, according to industry data.
Retail sales are important because they generate greater profits than sales to rental companies and other buyers of most known in the industry of fleet sales.
Chrysler CEO Sergio Marchionne said the company is not overly reliant on fleet sales, but he knows that sales to individuals should be increased.
He predicted retail sales would go up as new models in stores.
"The party fleet will become less and less important. But this is an important part of business," he said when asked by reporters last month.
Chrysler does not publicly break down sales for different groups of buyers. It says its sales are retail sales growing slowly from month to month.
Lack of enthusiasm for cars and trucks Chrysler is putting stress on its sale, who are trying to hold on while the automaker renews its lineup. offering its new single this year is the redesigned Jeep Grand Cherokee, even though 16 new or updated models coming soon.
While many dealers are happy with the jeep, they say they need new products faster. Until they come, the automaker has little choice but to rack up sales in most of the buyers, said Erich Merkle, president of consulting company Autoconomy.com.
"I think Chrysler's position, you've got to take what you can get," he said.
The manufacturer will have to turn around its results if the investment would pay the government by selling stock to the public. A sale of shares is not expected until at least next year.
Once the stock to "go public Chrysler, the company will be owned by thousands of shareholders, although Fiat Group SpA, which the U.S. government put in charge, can become the largest shareholder.
Chrysler has yet to post a net profit of leaving bankruptcy protection in June 2009. But it made 143 million U.S. dollars before interest and tax in the first three months of this year. Marchionne said that the only reason the company is not profitable is because it must pay interest on government loans.
But so far this year, Chrysler is the only major automaker to report a decline in retail sales, according to confidential data. Retail industry sales are up 11 percent, and they grew just 1 percent in General Motors Co., the other Detroit automaker to receive large government loans.
"I would expect at this point, if they are successful, they will be some number like 15 or 20 percent," said Gerald Meyers, a former chairman of American Motors Corp. who now teaches at the University of Michigan.
Both Chrysler and GM also lost sales crosstown rival Ford Motor Co. Ford has posted strong retail sales by stealing customers from the other two.
All three Detroit automakers are trying to reduce their dependence on fleet sales. Approximately two in five vehicles Chrysler sold in the first half of this year went to fleet buyers. Fleet sales made up 36 percent to 32 percent of Ford and GM buyers.
GM and Chrysler dominate sales to rental car companies. GM aging sedan, Chevrolet Impala, led all models on sale for rent during the first five months of this year, followed closely by the Chevrolet Cobalt, a compact that will be replaced in September.
Chrysler Town and Country minivan was ranked third in sales to rental, while its Dodge Charger sedan was fifth.
GM is also struggling to keep customers from defecting after selling or end its Pontiac, Hummer, Saturn and Saab brands. Only about one in four customers of those drivers has stayed with the remaining GM brands, Chevrolet, Buick, GMC and Cadillac.
This is less than 41 percent of purchasers who hold when GM scrapped Oldsmobile in 2004, but more than 18 percent of Chrysler buyers held after pouring Plymouth brand in 2001, according to JD Power and Associates.
GM argues that it is essentially a new company from his trip through bankruptcy protection last year and should be judged on its four existing brands. retail these four grew 19 percent in the first half, Henderson said GM. GM made money in the first quarter and is expected to post a second quarter profit.http://articles.ex-youtube.com/2010/08/chrysler-sales-rise-but-problems-lurk-behind-profits/
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